In re Duramax Diesel Litig.

681 F.Supp.3d 767

IN RE DURAMAX DIESEL LITIGATION

Case No. 1:17-cv-11661

United States District Court, E.D. Michigan, Northern Division

Signed July 12, 2023

OPINION AND ORDER GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT, DISMISSING CASE WITH PREJUDICE UNDER IMPLIED PREEMPTION, AND DENYING REMAINING MOTIONS AS MOOT

THOMAS L. LUDINGTON, United States District Judge

In this emissions-regulations case, the parties have spent years litigating the allegations that General Motors and Robert Bosch LLC misled consumers into purchasing GM-manufactured trucks by installing devices that defeat the emissions testing approved by the Environmental Protection Agency. But then the Sixth Circuit Court of Appeals recently dismissed a substantially similar claim as preempted by the Energy Policy and Conservation Act, 42 U.S.C. § 6201 et seq. The parties were directed to submit supplemental briefing regarding whether this case should be dismissed under that new precedent.

As explained hereafter, the case will be dismissed with prejudice because Plaintiffs' state-law claims are impliedly preempted by the Clean Air Act, 42 U.S.C. § 7401 et seq., and Plaintiffs lack statutory standing for their RICO claim because they are indirect purchasers.

I.

Plaintiffs are a group of consumers who purchased or leased a model year 2011-2016 Chevrolet Silverado 2500HD or 3500HD, or a GMC Sierra 2500HD or 3500HD (the "Duramax Trucks") and who seek to represent a putative class of "[a]ll persons who purchased or leased a [Duramax Truck]." ECF No. 18 at PageID.1015.¹ Plaintiffs' alleged injury is their overpayment for a Duramax Truck caused by Defendants General Motors and Bosch duping them into buying a Duramax Truck with "at least three different 'defeat devices' " that made the emissions comply with the regulations of the Environmental Protection Agency (EPA) and California Air Resources Board ("CARB"). Id. at PageID.893-94, 982, 1017. Their theory of liability follows:

[T]he Silverado and Sierra 2500 and 3500 models emit levels of NO_x many times higher than (i) their gasoline counterparts, (ii) what a reasonable consumer would expect, (iii) what GM had advertised, (iv) the [EPA]'s maximum standards, and (v) the levels set for the vehicles to obtain a certificate of compliance that allows them to be sold in the United States.

Id. at PageID.892.

In August 2022, Plaintiffs filed a Daubert motion to exclude two of Defendants' experts, ECF Nos. 367; 368 (sealed), and a motion for class certification, ECF Nos. 364; 366 (sealed). Meanwhile, Defendants filed a Daubert motion to exclude three of Plaintiffs' experts, ECF No. 370; 371 (sealed), and separate motions for summary judgment, ECF Nos. 363; 365 (sealed); 373.

On April 21, 2023, the Sixth Circuit dismissed seemingly identical claims as impliedly preempted by the Energy Policy and Conservation Act (EPCA), 42 U.S.C. § 6201 et seq., and its corresponding regulations for emissions testing, In re Ford Motor Co. F-150 & Ranger Truck Fuel Econ. Mktg. & Sales Pracs. Litig., 65 F.4th 851, 862-64 (6th Cir. 2023); see also ECF No. 431 (notifying this Court of the dismissal). And the petition for an en banc rehearing was denied by "the full court." In re Ford Motor Co. F-150 & Ranger Truck Fuel Econ. Mktg. & Sales Pracs. Litig., No. 22-1245, 2023 WL 4115991, at *1 (6th Cir. June 21, 2023).

The effect of that case, if any, has been briefed by the parties regarding this case. Plaintiffs assert their state-law claims are not preempted, ECF Nos. 438; 439; 441, while Defendants contend that implied preemption warrants dismissal of Plaintiffs' state-law claims, ECF Nos. 442; 443.

II.

A.

The Supremacy Clause of the United States Constitution provides that "the Laws of the United States . . . shall be the supreme Law of the Land," despite "any Thing in the Constitution or Laws of any State to the Contrary." U.S. CONST. art. VI, cl. 2. "The phrase 'Laws of the United States' encompasses both federal statutes themselves and federal regulations that are properly adopted in accordance with statutory authorization." City of New York v. FCC, 486 U.S. 57, 63, 108 S.Ct. 1637, 100 L.Ed.2d 48, (1988) (per curiam). Thus, "state laws that 'interfere with, or are contrary to the laws of congress, made in pursuance of the constitution' are invalid." Wis. Pub. Intervenor v. Mortier, 501 U.S. 597, 604, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991) (quoting Gibbons v. Ogden, 22 U.S. 1, 9 Wheat. 1, 6 L.Ed. 23 (1824)). This inquiry is largely one of congressional intent, i.e., whether the statute demonstrates an "intent to supplant state authority in a particular field." Id. at 604-05, 111 S.Ct. 2476. In line with the standards governing motions for dismissal, a defendant bears the burden of proof in establishing preemption as grounds for dismissal. Brown v. Earthboard Sports USA, Inc., 481 F.3d 901, 912 (6th Cir. 2007).

Ordinary preemption² provides an affirmative defense to support dismissal of a claim (as Ford did here). Hudak v. Elmcroft of Sagamore Hills, 58 F.4th 845, 852 (6th Cir. 2023). "State-law claims can be preempted expressly in a federal statute or regulation, or impliedly, where congressional intent to preempt state law is inferred." McDaniel v. Upsher-Smith Lab'ys, Inc., 893 F.3d 941, 944 (6th Cir. 2018) (citation omitted). Through an express preemption clause, Congress may make clear "that it is displacing or prohibiting the enactment of state legislation in a particular area." Matthews v. Centrus Energy Corp., 15 F.4th 714, 720 (6th Cir. 2021).

By contrast, implied preemption applies in one of two forms: field or conflict. Id. "Field preemption occurs 'where the scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it.' " Id. (quoting Gade v. Nat'l Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 98, 112 S.Ct. 2374, 120 L.Ed.2d 73 (1992)). Conflict preemption may instead be present when "Congress has not entirely displaced state regulation over the matter in question." Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984). In that circumstance, state law may be preempted "to the extent it actually conflicts with federal law, that is, when it is impossible to comply with both state and federal law, or where the state law stands as an obstacle to the accomplishment of the full purposes and objectives of Congress." Id. (internal citations omitted).

B.

Applying these principles three months ago, the Sixth Circuit dismissed a putative class action that a group of consumers brought against an automobile manufacturer. In re Ford Motor Co. F-150 & Ranger Truck Fuel Econ. Mktg. & Sales Pracs. Litig., 65 F.4th 851 (6th Cir. 2023), en banc reh'g denied per curiam, No. 22-1245, 2023 WL 4115991 (6th Cir. June 21, 2023). The consumers asserted state-law "fraud-on-the-agency" claims arising from manufacturer's alleged fraud on the EPA via submission of false fuel-economy-testing figures for certain truck models, which the Sixth Circuit held were impliedly preempted for conflicting with the EPCA, 42 U.S.C. § 6201 et seq., and its regulatory scheme.

The crux of the Sixth Circuit's holding of "first impression" is summarized as follows:

(1) "First, because the EPA accepted Ford's testing information and published its estimate based on that information, plaintiffs' claims essentially challenge the EPA's figures." Ford, 65 F.4th at 863 (quoting Farina v. Nokia Inc., 625 F.3d 97, 122 (3d Cir. 2010)).

(2) "Second, allowing juries to second-guess the EPA's fuel economy figures would permit them to rebalance the EPA's objectives." Id.

(3) "Third, as the EPA has the authority to approve or reject fuel economy figures, its 'federal statutory scheme amply empowers the [agency] to punish and deter fraud.' " Id. (alteration in original) (quoting Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 348, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001)).

(4) "Finally, state-law claims would skew the disclosures that manufacturers need to make to the EPA." Id.

In sum, the "state-law fraud-on-the-agency claims would 'inevitably conflict with the [EPA]'s responsibility to police fraud consistently with the Administration's judgment and objectives,' " id. at 861 (quoting Buckman, 531 U.S. at 350, 121 S.Ct. 1012). All these holdings apply the same with respect to the state-law claims at issue in this case, explained more extensively below.

III.

A.

When reviewing preemption, Congress's intentions are the lynchpin. Ford, 65 F.4th at 860 (quoting Cipollone v. Liggett Grp., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992)).

The EPCA and the Clean Air Act (CAA) both provide the EPA with wide-ranging authority to manage and to supervise motor-vehicle performance. The EPCA, enacted in 1975, aimed to establish a thorough regulation plan for fuel-economy testing, emphasizing the improvement of motor-vehicle energy efficiency and assuring reliable energy data. Id. at 854 (quoting 42 U.S.C. § 6201(5), (7)). Similarly, the CAA's goal is to safeguard and to improve the nation's air quality with a detailed regulation plan, which ultimately benefits public health, welfare, and productive capacity. 42 U.S.C. § 7401(b)(1). In sum, the CAA directs the EPA to set standards for air-pollutant emissions from new motor vehicles or their engines. Id. § 7521(a)(1).

Under both these regulatory frameworks, the responsibility of rigorous testing falls on vehicle manufacturers. Ford, 65 F.4th at 854-55; 42 U.S.C. § 7525(a)-(d), (h). And the EPA requires such manufacturers to use "a chassis dynamometer" to conduct testing cycles for both fuel economy under the EPCA and emissions under the CAA. Ford, 65 F.4th at 854-55; see also 40 C.F.R. § 86.115-78. Also, Congress clarified that fuel-economy tests should coincide with emission tests when possible, 49 U.S.C. § 32904, showcasing that regulating vehicle fuel economy (EPCA) and emissions (CAA) are complementary and manageable by the same testing...